In a significant move for the Russian e-commerce market, Prosus announced its acquisition of Avito, the largest online classifieds platform in Russia, for a whopping $6 billion. This acquisition is one of the largest deals in Russia’s internet history and represents a significant investment in the Russian market by Prosus, a Netherlands-based technology investor. This article will examine the acquisition details and the potential implications for the Russian e-commerce market.
Background on Avito and Prosus
Avito was founded in 2007 and quickly became Russia’s most comprehensive online classifieds platform. The company’s platform allows users to buy and sell goods and services and post jobs and real estate listings. Avito has over 40 million active monthly users and operates in over 30 cities in Russia.
Prosus is a global technology investor spun off from Naspers, a South African media company, in 2019. Prosus focuses on investing in technology companies that can transform industries and improve people’s lives. The company’s portfolio includes investments in companies like Tencent, Delivery Hero, and iFood.
Details of the Acquisition
Prosus’ acquisition of Avito includes purchasing 99.6% of the company’s shares. The deal values Avito at $7.6 billion, making it one of the largest internet deals in Russia’s history. They expect to close the acquisition in the second quarter of 2021, pending regulatory approval.
According to Bob van Dijk, CEO of Prosus, the acquisition of Avito is a “strategic investment” for the company. He stated that Avito’s “strong market position, classifieds expertise, and talented team” make it an attractive investment for Prosus. They also expect the acquisition to strengthen Prosus’ position in the Russian e-commerce market, one of the fastest-growing e-commerce markets in the world.
Implications for the Russian E-Commerce Market
They expect Prosus’ acquisition of Avito to have significant implications for the Russian e-commerce market. Avito already holds the position of the most extensive online classifieds platform in Russia, and they expect the acquisition by Prosus to further strengthen its position. The deal is also likely to pressure other e-commerce players in the Russian market, such as Yandex and Mail.ru.
According to Matthew Prinsloo, an equity analyst at Bloomberg Intelligence, the acquisition of Avito by Prosus is a “logical step” for the company. He stated that the addition gives Prosus a “meaningful presence” in the Russian e-commerce market, one of the world’s fastest-growing e-commerce markets.
Prinsloo also noted that the acquisition would likely increase competition in the Russian e-commerce market. He stated that the deal will “put pressure on other e-commerce players in the market, as they will now have to compete with a larger and more established player.”
Another potential implication of the acquisition is that it could consolidate the Russian e-commerce market. As more prominent players like Prosus and Avito continue to grow, smaller players may need help to compete. It could lead to consolidation in the market, with more significant players acquiring or smaller players exiting the market altogether.
Final Thoughts
Prosus’ acquisition of Avito for $6 billion represents a significant investment in the Russian e-commerce market. They expect the acquisition to strengthen Avito’s position as the most comprehensive online classifieds platform in Russia and pressure other e-commerce players in the market. The deal is also likely to increase competition in the market and potentially lead to consolidation. With the acquisition expected to close in the second quarter of 2021, it will be interesting to see how the Russian e-commerce market evolves in the coming months and years.
One potential challenge for Prosus in the Russian market is navigating the country’s regulatory environment. Russia has a history of imposing strict regulations on foreign technology companies. How the government will react to a foreign investor owning a significant stake in one of the country’s largest internet companies remains to be seen.
Despite this potential challenge, acquiring Avito is a bold move by Prosus. It highlights the company’s commitment to investing in technology companies that have the potential to transform industries and improve people’s lives. As the Russian e-commerce market grows, acquiring Avito could be an intelligent investment for Prosus and a game-changer for the Russian e-commerce industry.
Conclusion
Prosus’ acquisition of Avito for $6 billion is a significant investment in the Russian e-commerce market and highlights the potential of the need to attract global investors. They expect the acquisition to strengthen Avito’s position as the most comprehensive online classifieds platform in Russia and increase market competition. The acquisition also has the potential to prompt consolidation in the market, with larger players continuing to grow and smaller players finding it challenging to compete.
While there are potential challenges in navigating the Russian regulatory environment, the acquisition of Avito is a bold move by Prosus that highlights the company’s commitment to investing in technology companies that have the potential to transform industries and improve people’s lives. As the Russian e-commerce market grows, acquiring Avito could be an intelligent investment for Prosus and a game-changer for the Russian e-commerce industry.
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